May 6 (Bloomberg) -- Warren Buffett, the billionaire
chairman and chief executive officer of Berkshire Hathaway Inc.,
said he isn’t investing in corporate debt, including Apple
Inc.’s record offering, because yields are too low.

“We’re not buying corporate bonds of any kind now,”
Buffett, 82, said May 4 during an interview with Bloomberg
Television’s Betty Liu in Omaha, Nebraska, where Berkshire held
its annual meeting. “Not at those yields.”

Berkshire held $12.2 billion of corporate bonds as of March
31, according to a quarterly filing issued on May 3. That’s down
14 percent from two years earlier. The value of Berkshire’s
equity portfolio climbed 54 percent to $97.2 billion in the two
years ended March 31 as markets rallied and Buffett added shares
of International Business Machines Corp.

Yields on debt from corporate securities to Treasuries have
tumbled as the Federal Reserve slashed interest rates and bought
bonds to help the economy recover from recession. The payout
rate on dollar-denominated company debt fell to a record 3.35
percent on May 2, according to the Bank of America Merrill Lynch
U.S. Corporate & High Yield Index. Yields have averaged 5.87
percent during the past decade.

Apple, maker of the iPhone, sold $17 billion of bonds on
April 30 in the biggest corporate offering on record. Buffett,
who has said he limited investing in technology companies in
part because he doesn’t understand them, said the decision to
abstain from the Apple offering was part of a broader strategy.

‘Too Low’

“We’re not buying bonds of Apple -- we’re not buying bonds
of anybody,” Buffett said on May 4. “It has nothing to do with
them being a tech company. The yields are too low.”

Investors have flocked to bonds since the 2008 financial
crisis, when the Standard & Poor’s 500 Index of stocks fell
about 38 percent in a year.

Corporate and municipal bonds “were ridiculously cheap
relative to U.S. Treasuries” in early 2009, Buffett said in an
annual letter to investors in February 2010. “Big opportunities
come infrequently. When it’s raining gold, reach for a bucket,
not a thimble.”

‘Brutal’ Problem

The Fed has held its target interest rate for overnight
loans among banks between zero and 0.25 percent since December
2008 and is buying $85 billion of bonds a month. Buffett said on
May 4 during a question-and-answer session at the annual meeting
that he pities people who have “clung to fixed-dollar
investments.”

“The problem faced by people who have stayed in cash or
cash equivalents or short-term Treasuries, it is brutal,”
Buffett said. “I don’t know what I would do if I were in that
position.”

Buffett will collect a 9 percent dividend on the $8 billion
preferred stake Berkshire gets as part of a deal he struck in
February with 3G Capital to take ketchup-maker HJ Heinz Co.
private. Heinz is rated BBB+ by Standard and Poor’s, the eighth-highest of 10 investment grade levels. Apple has a AA+ grade,
the second highest.

Berkshire has been burned by bets on lower rated corporate
debt. The cost of impairments was $85 million in the first
quarter, compared with $337 million a year earlier, Berkshire
said last week. The losses in both periods were related to bonds
issued by Texas Competitive Electric Holdings.